Net Prophet 2010

Last week I attended the excellent Net Prophet conference which is an annual business and technology event hosted by the Ramp Group in Cape Town.

I took a fair amount of notes at the conference (something I haven’t done for a while!) and I thought that they may be of interest to people that weren’t able to attend so I’ve decided to post them here. I also wrote an article for Memeburn about a very inspiring entrepreneur who is passionate about improving the state of science, engineering and technology in South Africa and training tomorrow’s geeks.

Erik Hersman – Ushahidi

• 40% of Kenyan mobile users don’t keep a credit balance
• iYam.mobi – sms app store
• Build what people need not what the elite debate
• “Tropically Tolerant Software”
• iHub.co.ke – these places (Hubs) draw interesting entrepreneurs and innovation
• “Kenya is proving more lucrative per subscriber than South Africa” – mobile advertising network
• “Future is not SMS, present definitely is”
• Barriers to entry in Africa are very low

Vinny Lingham – Yola

Background:

Yola started in March 2007 with 5 people in Cape Town
Pitched to over 25 investors – getting investors is tough
Raised over $25m to date
Over 3.5 million active users
“Don’t lose sight of what’s really important in life”

Stages of launching a startup:

Stage 1 – Friends & Family

• Build momentum
• Business plans aren’t as valuable as building something that works and iterating
• Get products out to market quickly
• Don’t be secretive – overemphasis on business plans and NDAs waste valuable time
• Pitch to investors – don’t get excited until you have a term sheet
• Present, pitch, get exposure
• Bootstrap – keep it lean

Stage 2 – Series A: Proof & Concept

• Investment: $5 million
• Targeted user base before next round of funding: 1 million

Lesson’s learned:

• Going global is expensive
• Hiring cold (i.e without a network) is difficult
• Building a product team is critical for funded companies
• Splitting engineering (dev teams) is very difficult
• Making friends in the valley is tough

Stage 3 – $20 million

• Target user base before next round of funding: 5-6m users
• User analytics to make data driven decisions
• Viral growth is critical
• Focus on a target audience
• Don’t give too much away for free
• Good customer support is critical

Secrets to securing investment:

1. Great team
2. Good plan
3. Good networking (not necessarily great)
4. Great pitch! (1 or 2 sentences)
5. Good demo (helps a lot)
6. Persistence
7. Passion for your business
8. Show potential
9. Prove execution
10. Build products, not services!!! (service businesses don’t scale)

“SA technology re-investment conundrum”
Most entrepreneurs are in their 20’s (typical age group is 19-33 year olds)
Most SA 30yr olds net in a position to give back and re-invest in other SA businesses
As you get older you risk profile decreases

Reasons to be in the valley:

• Building a global business
• Depth of talent and skills (ppl who have been there, done that)
• Networking
• Fund raising
• Being ahead of the latest trends
• Conferences
• Biz dev opportunities
• Acquisition/liquidity!!! (hampers investment in SA)

Reasons NOT to be in the valley:

• Expensive in general
• Emerging market focus
• You’re not a good networker
• You are very attached to your family and social networks back home
• Your funding is limited
• You think you can be successful in SA

How to get to the valley:

• Fly Emirates
• Setup an offshore subsidiary
• It’s easier than you think – you just need to want to do it!
• Total cost to establish a business in SF – R100k

“Unless you’re trying to build a business and not just a product, you need capital”
“Freemium model is great, it’s just not enough”

Q: “If you have a prototype should you spend more time building the product or getting funding?” A: Tough question, but both!
“Take a long time view on your career (don’t be greedy)” – with regards to giving away ownership for capital in order to grow your business

Adriaan “Adii” Pienaar – WooThemes

Theme idea copied from Brian Gardner who was the first designer to make money from themes

2007
PNT Launches – Make contact with Magnus
2nd theme launched

2008
Woo.com launches
More themes, club subscriptions

2009
All founders still doing design and development (Mark, Magnus & Adii)
First WooTeam meet
Jeff joins core development team

2010
Featured on TechCrunch
Expression Engine becomes 2nd development platform
Drupal 3rd

Current site traffic:
3m+ pageviews
600k uniques
26k users

“We charged from the beginning” – made it easier to build the business

Lessons learned:

• Everything has happened from SA
• Objective was always to start an international business from SA
• No funding needed: Bootstrap & monetize
• $100 in sales from the beginning but grew quickly
• Marketing the stigma – use the fact that we’re South African as an advantage “market it!”
• Branding: be unique and personalize
• Listen to your audience – release and iterate
• Force their attention – don’t always ask for permission
• “Design is more important than tech” – tech is only half important
• “Customer is even more important than design” – Woo don’t offer tech support via phone calls or email to ensure that energy is spent on paying clients
• Stay on top of trends (just) – “nobody likes a copycat”
• Make sure you stay on top but don’t stop innovating
• Diversify your income – identify business risk such as dependency on only 1 platform
• Limit your exposure to risk as much as possible i.e contingency plan!
• Smile & enjoy – you need to enjoy what you’re doing

Q: Has PayPal made business easier? A: Doesn’t like PayPal Woo use 2Checkout.com for payments which has an API and also supports PayPal payments

Stefan Magdalinski – Mocality

Fastest bandwidth explosion ever – referring to current environment

Internet in Kenya – far more advertising for Telcos & broadband than in SA (more sophisticated market)

“Netbooks are going to see a huge explosion in Africa”

“Can’t talk about Kenya without talking about M-Pesa” – allows you to send cash via SMS
3 years young
9.5 million users (50% adults)
18 000 agents *change cash into SMS)
370 million USD p/m (50% YoY growth)

Why is mobile money important at the BOP?

• Productivity
• Transparency
• Safety
• Regularizes income & protects you from shocks (“rainy days”)

Users in Nairobi:

• Brand conscious
• Open-minded
• Mobile power users
• Multi-modal access
• Connected and always online
• Everybody is on Facebook in Kenya (Facebook optimization as well as SEO)

Still it is Africa so be careful out there!

Rich Mulholland – Missing Link

“Social media is cocaine for the connected” – like any drug it has side-affects
“When it comes to content, objective #1 should be to retain, not repeat!”
“Objective #2 Using Twitter for chit-chat is like having a conversation with a megaphone”
“May kill conversation!”
“140 characters do not make a conversation!”
“Side Effect 4 social media can blow things out of proportion”
“Side Effect 5 elevated sense of self-importance”
“Side Effect 6 could make you believe that people actually care”
“Side Effect 7 privacy is dead!”

People are the network, everything else is a tool! – what would you do in real life?

www.paper.li – newspaper based on tweets/hash codes a tool for aggregating and sculpting a stream of data.

We need a network agnostic social score – like/dislike
“Twitter is a social sharing network”

Patrick Kayton – Cognician

Innovating to shape the future:

1. Pick an important problem to solve
2. Slay a sacred cow
3. Invent a solution

Important problems in publishing?
“We are much better at creating content than managing it”

There are lots of Sacred Cows in publishing
“Social Media is reviving conversations”
Problem with information overload

Content should be more intrinsically:

1. Social
2. Sensory
3. Conceptual

Copia.com offers deep links into social media that allows you to discover what’s meaningful – community rating system for all the content

Dynamic book is an e-book that allows people to rewrite them

“The way you structure the content will have the most influence over how useful the content is”

Panel Discussion (Sarah Lacy, Stephen Newton, Stephan Ekbergh)

Sarah Lacy – TechCrunch.com

• Passion, risk-taker, entrepreneur
• “To be honest, I don’t think people in America think about Africa”
• If you’re driven as entrepreneurs anything is possible
• People pay for transactions in places like India even with their poverty level
• “The Web has compressed what you are able to charge for things and so has cloud computing to a large extent” – e.g. Cost of ads in Business Week vs. TechCrunch
• We always overestimate what technology can do in a year and underestimate what it can do in 10 years

Stephan Ekbergh – TravelStart

• Company as profitable in SA after 3 years compared to 10 in Sweden
• Definitely go mobile, the future of online
• “I want less devices, not more devices, I hate devices and when I saw the iPad I almost threw up”
• “The problem we tend to want to solve as entrepreneurs is getting out of poverty”
• “I don’t know a population that whines as much as South Africans”
• One of the most important tasks as an entrepreneur it to encourage other people to learn and go off and start their own companies

Stephan Newton – ex-Google.co.za

• It’s developed here, but only for a minority
• There are some problems that need to be fixed but everyplace has its problems
• Technology depends largely on infrastructure and cost of data
• “The Internet is a platform, it should be a right, not a privilege”
• Don’t forget about the grass in your own background – lots of opportunity in SA
• The big thing is getting access, once you have access then there’s nothing stopping the big success stories coming from Africa
• “Don’t sit on ideas, put them out there and see what happens”

Stuart Ntlathi – SNSET Institute

The most influential young South African you’ve probably never heard of is Stuart Ntlathi

Background:

• Started as a science club of 4 13-year old teens that were passionate about science, engineering and technology in 2010
• Now in it’s 10th year, it operates throughout all the provinces in SA as well as Taiwan and Singapore
• 21 000 people registered in South Africa
• Internet Cafes in townships to bridge the digital divide
• “Giving young people the platform to be part of the developing world”

“The Stuart Ntlathi Science, Engineering & Technology Institute is a non-profit organisation that inculcates and sustains quality interest of Science, Engineering & Technology amongst the youth of South Africa.”

14 hours to come up with a new invention that will change the world and mustn’t contribute to global warming. They also need to build a prototype.

“The Infinity Dream” – strive for what is unattainable

Some of the inventions that have come from SNSET (all built from recyclable materials):

• First electronic vuvuzela pre-loaded with the SA anthem
• Portable shoe polisher
• Auto cooling umbrella
• 14-in-1 Microwave

“The young people you meet today are the consumers of tomorrow”
Paramount that we support sc education for young people

CNN & Reuters making documentaries on SNSET in 2010

Earlier this year, Matthew asked me to contribute to Memeburn (read my first post entitled Why PayPal sucks and Kwedit doesn’t) and I thought that instead of me simply blogging about the launch, I would pose some questions to Matthew in an interviw format and share them with you here:

1. What is Memeburn and why did you decide to start it?
   

   Memeburn is a site that tracks emerging technology trends, carrying news about this sector and opinion from key influencers. You’ll therefore see a bias towards discussions around social media, mobile and startup companies in the tech sector. At the moment it has a South African bias, but the idea is to make it relevant to Africa and the broader emerging market regions. It’s also a job resource via Memejobs, which aims to attract a more entrepreneurial-type of person — someone who would thrive in a startup environment, sees the bigger picture, is passionate about the web and their work in it… someone who doesn’t care about “9-5″.

2. How long did the site take to build and what technologies did you use?
   

   It took about three months on a part time basis, starting in December. It’s a wordpress site. With it’s own customised theme and design, layered on a pre-existing theme that served as a blank slate. I started looking for the name and had about five options (including “memecube.com”) around about the middle of last year.

3. Who else was involved in the project?
   

   Two other people from Creative Spark, the parent company, were involved on a fulltime basis: Tim Gane on the editorial and project management side and Dan Bailey on the heavy PHP plumbing and server side. Vincent Maher helped with the early designs. I also bounced the odd crazy idea off Vincent and Nick Haralambous every now and again.

4. How does it compare to other sites that cover technology and the web?
   

   I used Mashable, Techcrunch and Read Write Web as examples — so you will see how they influenced the structure and design of memeburn. I tried to achieve a hybrid of a blog and a traditional media site. I’m still not happy that we are there yet. We’re still working on that and as the months go will make a few more changes, particularly to the homepage and category sections. In terms of design, I like sparse websites with pockets of busy-ness here and there, anchored in ample white space.

5. Is your target audience local or international and do you think its a reasonably sized market?
   

   Initially it is local and aimed at some parts of Africa (I’ve been talking to key people in Nigeria and Kenya). After we’ve stabilised the site and the business model, we’ll push harder at a more international audience, with a general emerging markets bias. I think the local market here is small, but not insignificant. Also with more broadband coming online it can only grow bigger.

6. What other sites influenced/inspired you, if any?
   

   Mashable, Techcrunch and Read Write Web

7. How did you manage to get so many influential people to participate prior to launch?
   

   That’s a good question. I can be persuasive :-) But I guess it’s because I’ve been in the online industry for a while and it’s helped that I’ve built good relationships with many players in the industry. I’m overwhelmed at the support we’ve received and the willingness  to participate from some very busy and influential people. Why do they do it? Like me, we see the industry as an ecosystem — we want to grow it, spread knowledge and ideas and build relationships — this is a good way to do it.

8. What improvements/features are you planning on rolling out in the near future?
   

   There is quite a bit we had to scale back just to focus on the basics. There are quite a few improvements we can do on the homepage, newsletters and memejobs. There is some blog aggregation we can do. The directory needs improving. I’d like to bolster the editorial team too. Our challenge is to stay focused on what is most important and not get distracted.

9. What success indicators will you be looking at to determine how well the site is performing?
   

   It will boil down to what traffic figures the site achieves. If we manage to publish solid stories that attract international attention — that would be a strong success factor in my mind.

10. Finally, it would seem that 2010 is the year that Internet start-ups rise from the ashes in South Africa. What do you think are the reasons for this and what advice can you give to aspiring entrepreneurs?
    

    I think there is an overwhelming world move towards entrepreneurship. In many respects we are entering the “age of the entrepreneur”. It has to do with the fact that technology and the web have lowered the production and distribution costs significantly. You don’t need big investment to start off an online business or publication. So much knowledge, open-source technology and resources are available online for free. Online businesses can be bootstrapped with minimal investment.

    You often hear now of corporates searching for an “entrepreneurial type” of employee or opening innovation divisions with a more entrepreneurial outlook. This is a direct response to this changed paradigm for business and publishing that the internet era has ushered in.

Thanks to a brilliant app called Brushes, budding artists across the globe are using the iPhone as a digital canvas to create incredible portraits and works of art in record time. One of the pioneers in this field is Jorge Colombo, an artist and illustrator based in New York, who creates sketches for The New Yorker and also sells prints online.

One of my favourites is this sketch he did of the famous Apollo Theatre in New York:

You can find more of his works on The New Yorker Finger Painting blog.

Most would agree that there are only a handful of successful South African Internet entrepreneurs and start-ups when compared to other parts of the world and the Internet hasn’t dramatically impacted the lives of the majority of the South African public or added much to their social upliftment.

The obvious question that popped up frequently over the course of the weekend was: “But should we care?”. There was a general consensus that we should, but for different reasons. Even the most dogmatic capitalists conceded that making money and enriching people’s lives weren’t mutually exclusive and that we all had vested interests in bringing Internet connectivity and entrepreneurship to the masses.

Some of the topics that were discussed in the interactive sessions, included policy, advocacy, skills and education, the future of mass communications, bootstrapping and funding, and online communities. There were also a number of informal “talking head” sessions whereby a participant would facilitate a brief discussion around a particular topic or theme within small groups that rotated every 15 minutes or so. These sessions proved to be very popular as they ensured that everybody had an opportunity to have their say and a lot got covered in a relatively short period of time.

A personal highlight was listening to the experiences and advice of serial entrepreneurs and South African success stories, Vinny Lingham and Gareth Knight, who both now live abroad but made a special effort to attend the event in order to support the initiative and network with like-minded South Africans. One of the pearls of wisdom that I picked up on was that as South Africans we need to be more outward looking and aim our sights at the global market as there’s no reason why a good homegrown idea can’t become a successful international business, and there are already a number of case studies to back this up.

Geek Retreat ’09 was by no means a panacea for solving South Africa’s Internet-related problems, nor did organizers Heather Ford and Justin Spratt intend it to be, but at the very least it allowed a small sample of great minds to discuss the myriad issues affecting both them and the country and to mobilize an enthusiastic team that will work towards making a positive difference.

Only time will tell to what extent it will live up to its mantra (borrowed from Openspaceworld.com):

Never before, and never again will the assembled group gather in this time and place. No one could possibly predict the synergism of effect that will take place when this particular group of people assemble.

For more on the Retreat including participants, session notes, and proposed projects go to the #geekretreat wiki.

Also read: Toby Shapshak’s Pattern Recognition column

The entire video was created using the stop motion animation technique, and besides looking cool, I can definitely detect a political message that underpins this short-film. Anyone else with me on that one?

Earlier today, Internet researcher and commentator, Arthur Goldstuck, presented the findings of World Wide Worx’s much anticipated “Internet Access in South Africa 2008″ study during the keynote of the Networkers at Cisco Live! conference which finished today at the Sandton Convention Centre.

Amongst the highlights were the fact that the Internet user base in South Africa has seen its highest rate of growth since 2001, increasing by 12.5% to 4,5-million in 2008.

I strongly suggest requesting a copy of the full report from World Wide Worx, but a summary of the trends and key findings are as follows:

Trend 1: There has been a 16% increase in Internet service providers
Trend 2: Hundreds of rogue and unlicensed networks are in existence
Trend 3: ADSL dominance is ending as a result of wireless broadband
Trend 4: Wireless broadband has entered the mainstream
Trend 5: Broadband culture has taken hold in SA
Trend 6: Dial-up at the end of its lifespan
Trend 7: ADSL has grown through SME installations
Trend 8: Cellphone Internet usage contributed to the Internet base
Trend 9: 12.5% jump in Internet users
Trend 10: Internet Adoption curve recovers
Trend 11: Strong growth predicted over next 5 years
Trend 12: Repeat adoption patterns
Trend 13: Experience curve flattens
Trend 14: But the experience curve will kick in again
Trend 15: Inflection point in 2013
Trend 16: More Bandwidth and increased caps!

Overall, the findings confirm what many, including myself, believe paint a bright future for South Africa’s maturing Internet population with the gap slowly closing between us and the developed world. Once SEACOM (the new fibre optic cable that will connect the East Coast of Africa to Southern Africa, Europe and Asia) goes into operation in mid-2009, the wholesale price of bandwidth is expected to come down drastically while connection speeds will far exceed anything experienced in the past.

Thanks to factors such as SEACOM and Fifa 2010, Goldstuck predicts that SA’s Internet Population will grow by 13.3% in 2009 & a whopping 17.6% in 2010!!!

It wasn’t all good news however, and Goldstuck did issue some caveats about the growing inequality gap that is emerging between South Africa’s haves and have-nots. For example, even under these new favourable conditions, it could take as long as 10 years before the previously disadvantaged are properly integrated due to the 5 year Internet experience curve. The fact remains that all the bandwidth in the world is pointless unless basic social and environmental factors are addressed such as literacy and access to reliable power.

Goldstuck also says that next year’s national elections are a key milestone and will largely determine whether the government is able to deliver on its social promises or not and whoever takes over as the next Minister of Communications will play an equally vital role in shaping the future.

Read Paul Jacobson’s post for more on this topic.

Follow the Networkers at Cisco Live! conference on YouTube, Flickr, Twitter, Facebook or check out their very funky social media press release.

UPDATE: An edited version of Goldstuck’s presentation was uploaded on YouTube (watch below):

You can listen to the show below (approximately 7 mins):

The South African Broadcasting Corporation (SABC) recently made a grandiose announcement regarding the relaunch of their SABC News portal, which many industry commentators have called out over the years for being a wasted opportunity since the SABC has access to vast amounts of staff, local news and multimedia content – our very own CNN BBC.

Rather unsurprisingly, the angle of the great relaunch revolves around social media and Web 2.0, as stated in the Biz Community press release:

According to Sandison, the Web 2.0 features of the new site are expected to be its trump card. “Users will be able to customise a news homepage that reflects their interests, download or subscribe to our Podcasts and upload their own footage to the ‘Caught on Camera’ section.

Not entirely novel, but full marks for attempting to get with the times. Sadly, the site is really let down by the actual execution of this strategy which gives the impression that all these so-called ‘bells and whistles’ were a complete afterthought rather than a deliberate attempt at engaging visitors and branching out to a more savvy audience.

For example, multimedia content is relegated to an unattractive module below the page fold and, besides the pictures of the day, simply displays the latest audio and video bulletins in bullet point format. My biggest gripe however, is the fact that they chose to use RealNetworks (they still going? there’s hope for Netscape yet!) as their only encoding format instead of something with more market share such as Flash or Windows Media. I don’t have RealPlayer or its associated browser plug-ins installed and, like most other people, couldn’t be bothered to go to all this effort for the one website I’ve come across lately that insists on using it.

Yet another pearler from the press release:

This [Web 2.0 features] will be enhanced in the second phase of the site development, when users can visit the mobi portal to receive news headlines and traffic and weather reports on their mobile phones.

Any publisher that is serious about building a digital brand and making revenue in Africa should know that mobile is an essential channel with far greater reach than the desktop web and should never be considered a “phase 2″. One could pose the question to SABC – why didn’t they launch a proper news mobi portal first before redesigning their website?

There’s no doubt that the new site features vast improvements over the old one and might in fact see some growth in traffic, but the cluttered design and the fact that there was No Breaking News (sic) when I checked in this morning leads me to believe that they still have a very long way to go if they are serious about becoming a competitor in this ultra competitive market.

Ok, might as well come clean!!! Alison Carroll, AKA Lara Croft, was recently in South Africa to promote the forthcoming Tomb Raider: Underworld, the latest game in the Tomb Raider franchise, and decided to pop in to the Avusa offices for a bit of a photo shoot (perks of the job).

Some might say that there is a slight height difference and an uncanny resemblance to a scene out of the Lord of the Rings but I’ll let you be the judge: